Italian jobless rate nears 40-year high

ROME--Italy's unemployment rate rose to its highest level in nearly 40 years in January, driven by hefty job losses among prime-age adults even as more people joining the labor force, national statistics institute Istat reported Friday.

The official jobless rate rose to 12.9% in January, up from 12.7% in December, Istat said, citing preliminary seasonally adjusted data. That is the highest in this data series beginning in 2004 and the highest recorded since 1977.

The increase reflected a 60,000 decline in the number of employed residents and a 45,000 drop in the number of people not seeking a job, according to Istat.

The youth unemployment rate rose to 42.4%, up from 41.7% in December, Istat said.

The dismal figures reflected weakness in domestic demand even as Italy's economy begins to expand thanks to exports. Male employment, which is more likely to be in manufacturing sectors, actually rose modestly from the previous month, while female employment fell, according to Istat's data.

Still, the male jobless rate increased, as more declared they are seeking work. That suggests Italy's income-support benefits for those who lose their jobs are running out, as those receiving them are not counted as unemployed.

The burden of Italy's weak labor market is falling heaviest on those under 49--reflecting the recent increase in the mandatory pension age--and those with full-time permanent jobs, for which employment protection rules have been relaxed, according to Istat.

The number of those with jobs fell 397,000 in the fourth quarter of 2013 compared to the same period a year earlier, Istat said. That reflected a 254,000 increase in jobs held by Italians over 50 years old, a 205,000 drop in jobs held by those aged 35 to 49 and a 446,000 decline in jobs held by younger workers.

As older workers often have seniority terms assuring them higher salaries, the evolution is likely to have a negative impact on productivity measures, according to analysts. Italy is unusual among advanced nations as wages rise steadily over a typical career instead of peaking and then beginning to decline, according to one of Mr. Renzi's senior economic advisers.

The number of part-time jobs increased by 90,000 in the fourth quarter of 2013 from a year earlier, underscoring that most job losses have been full-time positions.

Job losses have been most severe in construction, down 7.3% from late 2012, and agriculture, down 8.4%, while they fell only 0.4% in manufacturing, according to Istat.

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